Surdak & Co.

1. From the Mall to the Mortuary: The Retailer Apocalypse Continues

Call me Captain Obvious, but the die-off of major retail merchandisers will not only continue in 2017, it will accelerate. E-commerce juggernaut Amazon maintains its relentless assault on traditional retailers, and is likely to double its revenues over the next three years. I’m not certain which brick-and-mortar stores will die, but Sears/K-Mart, JCPenney’s and Macy’s are all ripe for financial failure. Additionally, there are scores of retail specialists that are in financial hospice, such as Men’s Warehouse, Walgreen’s and Office Depot. Even retail Goliath Walmart continues to ‘rationalize’ its inventory of stores; with a wave of additional closing being anticipated.

What does this have to do with Big Data? Everything, actually. Amazon is a data company that happens to sell stuff to consumers, rather than a retailer that uses data. Amazon is a full-on digital company that uses data to completely out-compete traditional analogs.

2. Amazon Prime Shuttle? Amazon Pilots a ‘Ride For Hire’ Service

Part of being digital is relentless innovation, trial-and-error, and a fail-fast strategy. If you’ve used Amazon’s Prime service recently, you may have noticed that your package was dropped off not by UPS or FedEx, but by Tom, Dick or Harriett from down the street. Amazon is using the sharing economy model of Uber and Lyft to provide same-day package delivery. It would seem rational, economical, and therefore likely, that Amazon would expand this service to include delivering riders, instead of just packages.

The Big Data connection is that to be successful in a digital world you must know the context of demands and supply, and put these two things together better and faster than anyone else. Once you have this mechanism in place, WHICH demands you supply is open to pretty much anything. Amazon’s digital infrastructure can deliver people as easily as it can deliver packages. As such, there’s a good chance we will see a trial of an Amazon ride-share service in 2017.

3. Uber Goes Gecko? The Rideshare App Starts to Insure its Drivers

Uber’s access economy model for transportation breaks with numerous traditions, and no small number of laws and regulations. Insurance is a significant challenge for this business, as companies that believe they are insuring an individual driver aren’t pleased to find out their customers have customers of their own. The risk models and actuarial tables used by traditional insurance companies were never designed for an Uberfied world, which has led to a whole new market for insurance innovators.

Like Amazon, Uber was born a digital company and deals with such challenges in the same way: try something unexpected and see if it works. Uber has both the financial wherewithal and the data necessary to provide insurance to its drivers far more effectively than traditional insurers ever could; even if analog insurers wanted to provide such coverage, which they likely don’t. So, I wouldn’t be surprised to see Uber provide driver and rider insurance, along with a whole range of context-aware products and services that build upon their control of customer context.

4. Bitcoin will surpass $1,000 in value, and then will pass $1,200 after Amazon announces it will accept direct bitcoin payments.

Bitcoin, the trailblazing cryptocurrency, has seen its share of ups and downs since its birth in January of 2009. In typical digital fashion, its swings in value seem to occur far faster and more frequently than with traditional currencies. Nonetheless, bitcoin’s value has, on average, continued to increase over time, approaching $900 by the end of 2016. As the bitcoin market matures, and traditional economic tools and assets grow riskier, bitcoin’s value will continue to both grow and stabilize. I predict that bitcoin will soon surpass, and remain above, $1,000 per coin. My stretch prediction is that Amazon will begin accepting bitcoin for payment, which will cause a further surge in the currency’s value.

What does Bitcoin have to do with Big Data? Plenty. The blockchain technology that underpins bitcoin is undergoing widespread exploration in a number of different applications. The value inherent in an anonymous, untraceable yet trustable source of funds is enormous in an increasingly digital world, and cryptocurrencies will likely grow in importance as our society’s data metabolism outstrips our analog financial services industry’s ability to keep pace.

5. Virtually There With the 10th Anniversary iPhone 8

While it’s hard to argue with the financial performance of Apple over the last decade, there’s a strong argument that the company has lost its ability to innovate. Since Steve Jobs launched the iPad, Apple has been an engine of improvement, rather than innovation. It’s painful watching Apple lose it’s digital-ness, and turn more and more analog, but all organizations mature with time. One result of this evolution is that Apple frequently finds itself playing fast-follower to its more innovative competitors. With the coming tenth anniversary of the iPhone, Apple needs to show that it can at least keep up with other platforms, if not exactly blaze new trails.

One such example is in the arena of virtual- and enhanced-reality. While Google, Samsung and even Microsoft have been innovating in this space, Apple has been notable by its absence. If it’s going to make a real splash with its upcoming iPhone 8, Apple needs to enter the VR game, and needs to do so decisively. I’m willing to bet that Apple has plans for such a release in 2017, as they tend to be a year or two behind their competitors with such innovations.

A VR-enabled iPhone is relevant to Big Data because making VR useful is all about context. The real-time data demands of interactive VR or ER are astronomical, and owning this space will be critical to digital competitiveness in the coming decade. The deployment and adoption of commercially-viable, real-time, interactive ER and VR will increase our society’s creation and consumption of data by a million-fold. Big Data indeed.

6. The Trump Administration Gives Birth to the BCL

Despite stumping on a platform of pro-business, anti-bureaucracy, pro-free-market policies, I anticipate that the coming Trump administration will, in 2017, lay the foundation for something that may be known as the Bureau of Cyber Labor (BCL). This new government agency will be tasked with setting standards for and regulation of both physical and software robots as they enter more and more segments of our economy.

The BCL will grow out of an Artificial Intelligence working group created by Trump to understand the impacts of cyber labor. Robotic Process Automation (RPA) and Artificial Intelligence (AI) are positioned to become major forces of economic growth, and disruption. They will impact large segments of the current workforce, particularly in the middle- and upper-class. Additionally, there are substantial moral issues that the use of these technologies bring to the fore even as businesses rush headlong into their deployment. I predict that in 2017 we will start to see the beginnings of what will eventually be a bureau of oversight for these technologies.

7. War Games are Outed

In the 1980’s movie War Games, global conflict between nations moved from the physical world into the cyber world. In today’s world, we seem to be witnessing the opposite. The alleged Russian interference in the American presidential election may be a natural escalation of an online war that has been growing in intensity for decades. This war has grown to the point that it can no longer be hidden from our society. Cyber warfare between nation states will become more evident, as populist governments begin exposing the degree to which cyber conflict has grown over the last decade.

Global cyber conflict is a Big Data topic because, as I discuss in my book, Jerk, data is taking over for capital as the dominant source of wealth and power in the world. 2016 clearly demonstrated the power of weaponized data, as one or two well-placed and more importantly well-timed strikes were likely enough to change the course of the presidential election. Any organization questioning whether investments in data analytics or governance are warranted are probably already falling into irrelevance.

8. In-Home Digital Assistants Testify in Court

One of the hot new items for sale in late 2016 were voice-activated digital assistants. Both Amazon’s Echo and Google’s Home were heavily advertised during the holiday season, and both demonstrated their ability to perform a wide range of functions based upon their owners’ voice commands. Anyone who has used Siri or Alexa on their smartphone has some experience with this technology, which is often the source of as much frustration as it is convenience.

As if smart phone digital assistants weren’t invasive enough, in-home devices such as Echo or Home literally live in our homes with us, monitoring all that we do in our most private spaces. In order for these devices to respond to their users, they need to be listening all of the time. And listen they do, as was recently discovered by an alleged murderer in Arkansas, who killed a colleague in a house where an Amazon Echo was installed.

Following the precedent set by Apple in the San Bernardino shooting, Amazon has thus far refused to release any data captured by the Echo to the police. However, I predict that in 2017, enough people will have bought enough of these devices, and enough of these devices will witness enough illegal acts, that someone, somewhere, will be convicted of a felony based upon information recorded by their in-home digital assistant. So much for privacy.

9. Pokémon Go Hits Its Stride

One of the hot stories of 2016 was the release, and subsequent global explosion, of Pokémon Go. This seemingly-benign enhanced reality game took the world by storm. Within weeks of its initial launch, Go had millions of players spending billions of minutes taking trillions of steps as they wandered the planet looking for lost Pokémon characters. Soon thereafter, people were being arrested for jaywalking and trespassing, injuring themselves by tripping over unseen obstacles, and even dying, literally, as they tried to locate Pikachu.

The gaming company Nintendo was the sponsor of this new enhanced-reality platform created by Niantic, and Nintendo pocketed 19% of the $600 million that Niantic earned in the first three months that the app was in use. While by late-2016 much of the initial hype of Pokémon Go had settled down, it still has an enormous base of users and both Niantic and Nintendo have barely scratched the surface of the revenue engine they have created.

I predict that by the spring of 2017 revenues from Go will easily exceed $1 billion, and will then grow to over $2 billion by the end of summer. These numbers give only the slightest hint of what is possible with enhanced and virtual reality businesses, which is a market that will explode over the coming decade.

10. Living Everywhere and Nowhere

Finally, for those who are deeply concerned about the populist, protectionist, anti-immigration sentiment that seems to be on the rise throughout the world – fear not. The answer to such protectionism may be cyber migration, a trend which may pick up considerable steam in 2017. E-Residency was launched in Estonia in 2014 as a means of attracting talent and money into this small country’s economy. It allowed people to establish a formal, legally-binding residency status with their national government, regardless of where a person actually lived.

Such status may seem pointless. Indeed, many government officials scoff at the notion of virtual residency. However, it has since become apparent that through e-residency, cryptocurrency, and the internet, it is now possible for individuals to set up entire corporate entities that don’t exist in the physical world, and circumvent centuries of analog infrastructure such as licenses, registrations and even taxes.

Given ever-increasing demands for public funds, and ever-increasing burdens of licensing and registration for businesses, countries that offer virtual residency may soon become digital safe havens. Such countries will become free trade zones for digital organizations, freed from the paperwork, frustrations and taxation of countries buried in their own bureaucracies. To reinforce the potential of cyber migration to disrupt the world’s power structure, several other governments have implemented or are considering their own e-residency programs, such as Singapore and the City-State of Dubai.

Big Data Predictions: The Only Constant is Change

As this list shows, I’ve largely abandoned the traditional notion that Big Data is a technology discussion. Big Data is not about technology, nor is it really about data. Instead, what is revolutionary about Big Data is how it changes how we live, how we work and how we play, and how the digitization of our society is changing the most basic aspects of how we believe the world should work. The take away for large, traditional, analog organizations is this; your time is short. Not only are the rules that you’ve followed for centuries losing their relevance, rules themselves are being replaced by a new means of control, called analytics. The real revolution of Big Data is not that we can use data and facts to improve our world, it’s that increasingly we must.

Since the Industrial Revolution, Capitalist organizations have worked to combine the classic inputs of Capital, Resources and Labor as effectively as possible. Those who got this mixture right produced better results and outperformed their competition. But, after 200 years of relentless improvement, has a fundamental error in management thinking set these same organizations up to fail? The recent slowdown in productivity growth may indicate that a reassessment of the role of people is not only timely, it may be imperative.

Human Asset Management

Humans aren’t resources. They aren’t fungible. They aren’t grain, or gas or pig iron. One cannot be interchanged with another, or if they can be, you have the wrong ones in a digital, 3-D printing, just-in-time, appified world.

Humans also aren’t capital. Indeed, they’re the very opposite. Capital is something that you use as much as you can, as hard as you can, the same way, over and over, with the expectation of wearing it out, depreciating it as you go, and then replacing it once it has become obsolete, and its perceived value has declined to zero.

Instead of these outdated, wrong-minded views of labor, organizations have to start treating labor as unique inputs to their production. Humans must be viewed as unique assets. If they aren’t then they will be liabilities. They grow and appreciate over time, they add value and they enrich other inputs to a business process. Or, they do the exact opposite.

Viewing humans as resources or capital made sense because it was easy and because we had to manage resources and capital in any event. For 200 years, this error was not so egregious that we couldn’t make up for it, and so we did. But in today’s world, where resources, capital and the Analog Trinity are all commoditized, the only lever we have left is human individuality, creativity and ingenuity. That this occurred at the same time as our Human Resource- or Human Capital-approaches to managing people were also automated and digitally-enforced is decidedly inconvenient.

A Brief History of Capitalism

In our present, hyper-fast, just-in-time, click-here-to-buy world it’s often hard to imagine what life may have been like just a century ago. In 1916 the world was embroiled in World War I, the first truly industrialized war. The automobile, the airplane, the telephone, the lightbulb, electricity, penicillin and aluminum were only just finding their way into common use. People were still wrapping their heads around break-through innovations like the zipper, plastics and instant coffee, while scientists at General Electric were trying to find a use for their new vacuum triode, the precursor to radio, television and other 20th Century miracles.

During the century before that, business people and scientists were simply struggling to understand the new idea of Capitalism. Frederick Taylor and other 19th century economists defined Capitalism as the creation of wealth through the combination of three key inputs: Resources, Capital and Labor. Resources were raw materials such as minerals, crops, livestock and energy. They were things you grew, mined or harvested. Capital consisted of either enhanced resources that added value to raw materials, or the finances required to do so. Capital was factories, machines, and money. Finally, labor was the muscle and brain power that used capital to turn resources into finished products. Combine these three inputs in the right way, and wealth and power would result.

Taylor was aware that there was a fourth category of inputs to Capitalism: Intangibles. There were two types of intangibles: Organizational and Individual. Organizational intangibles were Bureaucracy, Processes and Rules, which I refer to as the Analog Trinity. These three elements controlled how efficiently and effectively resources, capital and labor were combined. In his time these were in their infancy.

Prior to 1900, simply accessing these three inputs and putting them together was a challenge. Vertical integration was the name of the game, and the robber barons of the late 19th Century were likely a necessary evil for getting Capitalism out of the starting blocks.

Individual intangibles including things like intelligence, creativity, experience and skill. Taylor recognized that not all labor was equal. Some workers were more effective than others, particularly when using old-world, craftsman-like approaches. Prior to industrialization, different people created outputs of vastly different quality. Indeed, an individual might produce a phenomenal widget on Monday and then a horrible instance of the same widget the following Thursday. Humans are a many splendored thing, and often we are predictably unpredictable, and decidedly un-fungible.

Taylor and his contemporaries recognized this variability, and decided to use capital to eliminate it. By making the inputs of people predictable, repeatable and quantified, Taylor worked to make labor more like raw material. His goal was to make labor commoditized, fungible and interchangeable. At this he was remarkably successful and so was born the notion of “Human Resources.”

The notion of “Human Resources” was purposefully dehumanizing. The idea was that individuality, skill and experience were bad things, and they needed to be eliminated in order to make labor easier to use, and easier to replace. This notion that people were interchangeable, combined with the mass migration of people escaping war, famine and civil disorder in Europe and Asia at this time led to the collapse of wages and the open hostility between “management” and “Labor” in the late 1800’s. Indeed, this dehumanization of labor led directly to the creation and growth of capitalism’s nemesis, Communism, at that same time in history.

Losing for Winning

Economic, technological and social advances spurred on by two world wars drove advancement in humanity’s access to the three basic inputs to capitalism. The industrial demands of these wars forced organizations to address issues of maximizing the effective and efficient use of Capital, Raw Materials and Labor. By the 1930s the notion of humans as resources had finally crystallized in capitalist thinking and this, combined with easier access to capital and raw materials, dramatically increased economic growth after the Great Depression. While World War II began as a war between ideologies it ended as a war of production. By mobilizing an ‘’arsenal of democracy’ the allies secured victory and set the stage for a half-century of consumerism and economic growth.

In this post war world access to the three basic inputs to capitalist production were secure and their combination was well understood. Advances in global logistics meant that raw materials were readily accessible. The war lifted the global economy out of its prior depression, and capital was once again available. Finally, millions of soldiers returned to their domestic pool of labor, adding to the millions of women who had entered the workforce as men were deployed to war. Suddenly, all three of the basic inputs to capitalism were in ample supply, just as war-torn countries began rebuilding their infrastructure and discharged soldiers began marrying and starting families.

Those people left the military, where there was a clear class distinction between officers and soldiers, and entered the workplace, where there was a similar distinction between labor and management. Managers were considered less fungible than laborers and they were treated that way, exactly like officers in the military. Workers may not have liked being treated as mere “Human Resources” but at least they were making living wages and were no longer dodging bullets.

The Analog Trinity Comes to the Fore

At this point, organizations changed their competitive focus to the less-tangible factors of the Analog Trinity. Competitive advantage came not from just accessing these inputs, it now mattered how well you combined them. Business operations became a key differentiator between one company and the next. Building the best combination of bureaucracy, process and rules separated the winners from the losers. Businesses worked hard to improve these intangible inputs, a process that was dramatically accelerated by the introduction of Information Technology.

For half a century, organizations implemented ever-more-powerful information technology in order to automate their Analog Trinities. Companies embraced a range of IT tools to improve how they used Resources, Capital and Labor in order to produce outcomes. By the 1990’s most companies were deploying tools we have all heard of, like ERP, CRM, SCM, etc.

The application of information technology to the intangibles of production, the Analog Trinity, led to the enormous growth in productivity that society enjoyed through most of the last-half of the 20th Century. It also became the source of differentiation and competitiveness, at least for a time. Companies that automated their business management became more efficient and effective than their competitors and customers rewarded them with their dollars. Investing in and implementing enterprise-class IT solutions was extremely expensive, and disruptive. However, the benefits to companies were large enough to warrant this expense. As a result, business IT became the multi-trillion-dollar industry that we see today.

The use of information technology had several unintended consequences. One of these was the creation of a new class of worker: The Knowledge Worker. Knowledge workers were programmers, analysts, and other semi-white-collar positions that hadn’t existed prior to the use of IT. These workers definitely weren’t fungible like laborers, but they weren’t quite management, either. This creation and growth of a new kind of worker catalyzed the growing adoption of a new view of Labor: “Human Capital.”

Human Capital: Wrong Again

Where Human Resources attempted to treat Labor like raw materials (commoditized and fungible), Human Capital attempted to treat Labor like capital. Here, capital was something that was invested in, utilized as much as possible and then discarded once the costs of its maintenance exceeds the value it generates. The Human Capital approach recognized that some people were more productive, creative or valuable than others, and that the organization needed to recognize this difference, and extract as much additional value from it as possible, as long as it was cost effective to do so. Human Capital also sounded more politically correct than Human Resources. It recognized, at least a little, that some people might be less fungible than others.

Under a Human Resources view, people were completely interchangeable, and they were treated that way. You were an employee only in the sense that your employer needed to keep track of you for tax purposes. Before unionization, many employees worked day-to-day, never knowing if they’d have a job the following morning. Many workers showed up the next day to find that their job was taken by someone else willing to work for 5 percent less, or so they were told by their management. Their productivity was measured by how many hours they spent standing at their station, pushing out product. Beyond that, little else mattered.

Human Capital was only slightly better than this. Here, organizations recognized that it was possible for one worker to be better than another. In the world of IT, there was an enormous difference between a talented software developer and a novice, and organizations were forced to recognize this. Reluctantly, most organizations readjusted to the idea that talent, skill and experience mattered. They were still lousy at measuring and rewarding these distinctions, but change takes time and effort. By the early 21st Century, workers were being measured by the timeliness of their status reports, how many lines of code they wrote per week or how effectively they contributed to their tiger team.

This perspective, Humans as Capital, when combined with the improving productivity brought by information technology, led to the great labor culling of the 1980’s and 1990’s. Organizations around the world saw their productivity soar just as the Baby Boom generation started to approach retirement age. From a capital-centric view, these people were done. They had gone through a lifetime of annual raises, they were struggling to adopt and use new tools and technologies in new ways, and their prior experience at managing the Analog Trinity was no longer valued. Hence, hundreds of thousands of older workers were pushed into early retirement by organizations that viewed them as capital: Costly to maintain, fully-depreciated, and past their useful life.

Human Capital may have sounded better than Human Resources, but the end result was still the same.

The Death of Competition?

Through the 1990’s IT business tools matured to the point that each category had one or two players who were “world class.” For example, every company used either SAP, Oracle or Peoplesoft for ERP. There were a few hangers-on in each segment, but by 2000 the market for enterprise information tools had consolidated around a handful of players.

These players sold themselves on the idea that each was “world class.” If you wanted to have the best Analog Trinity, you needed to use their software. Soon, everyone was, and everyone became “world class” at automating their Bureaucracy, Processes and Rules. This actually facilitated the other enormous business trend of the time: offshoring. Once your business processes were automated, they could be performed anywhere, by anyone. Since workers were relatively expensive in the U.S. and Europe, replacing these people with workers in lower-cost countries was an easy way of reducing costs. This only worked because enterprise information technology automated the Analog Trinity, and because organizations could find appropriate replacement labor in cheaper markets because of their new Human Capital metrics.

While costs dropped and productivity grew through this transition, there was a problem. Soon, everyone was using the same software to automate their Analog Trinity, and to make them world class. But, this homogeneity in approach meant that everyone had the same intangible inputs to their production. This source of competitive differentiation was gone, as companies all performed their tasks pretty much the same as everyone else, and did so with the same inputs. The wave of business automation that swept organizations through the 1990’s started to make the Analog Trinity fungible. ERP, CRM and SCM made everyone equally-efficient, and so differentiation became even more difficult.

Outsourcing: The Final Nail in the Coffin

What REALLY made the Analog Trinity fungible is outsourcing. From the mid-1990’s through today, companies outsourced more and more of the elements of their Analog Trinity in an effort to reduce their costs. First to go was the labor in their bureaucracies as this was the most obvious cost.

Once an organization gave part or all of its bureaucracy, processes and rules to some vendor, and the vendor runs it like they do for everyone else, the results truly ARE fungible. Indeed, that was the point of outsourcing it: efficiency, and economies of scale and scope. This homogeneity benefitted everyone and no one at the same time, and the Analog Trinity no longer differentiates. If these days, companies feel like it’s harder to find and to keep customers that’s because it is. They have the same access to Resources, Capital and Labor as everyone else, and they put these together in the same way as everyone else. As long as all of these inputs are the same, so too are their outputs. Competition is hard now not so much because of globalization, but rather because of homogenization.

The Fifth Element: Treating Labor as Labor

In our present world, differentiation is increasingly difficult, and increasingly imperative. Capitalism has been so successful that most consumers expect perfect outcomes and the lowest possible price, instantaneously and without effort. And, if you don’t give it to them, someone else will. All of the inputs to production are now commoditized and differentiation is increasingly difficult. Even the old standbys of marketing and advertising no longer work as consumers are carpet-bombed by messaging through their smart phones and apps.

There is another source of differentiation out there, and it is now coming to the fore. It is exactly what Taylor and the other early capitalists despised, and it is exactly what 200 years of Human Resources and Human Capital tried to eliminate: Human thinking and creativity. The variability that Taylor despised is the last vestige of differentiation left for organizations to leverage. When every other input to your production is the same as everyone else’s, the individual skill, talent, experience and ability of your people are the only differentiations left.

This is bad news for people who view people as either resources or capital, because these perspectives discount or even discourage the very thing that could save them. If your existing tools and techniques for measuring the value of people strive for consistency, repeatability and homogeneity, then the people you retain and reward are those who are least different. This is exactly the opposite of what is required, now that all other inputs to your organization are fungible.

The people that you now employ may get their reports in on time, may follow all of your business rules to the letter and may respond to their emails with six-sigma predictability, but are they creative? Do they generate new, different, innovative ideas? Likely not. Or at least not while you expect them to act like raw materials or capital. Almost every manager I have ever had has rationalized or apologized for these metrics. They acknowledged that they were utterly useless in determining a person’s actual value to the company. But in the absence of actually-useful metrics they needed to use something, and managers believed that such quantitative, capital-centric metrics were better than nothing. Arguably, they were horribly wrong in this view. If your organization measures and rewards people for pretending to be coal and corn or machines and money, then that’s likely all you will get from them.

Social Media, Big Data and the Intimacy Revolution

The topics of Social Media, Big Data and Artificial Intelligence (AI) are enormously popular. This is no accident. In their struggle to compete, organizations have found that the avenues of success in the past are no longer available. Simply improving quality or decreasing cost no longer seems to differentiate. Once you’ve outsourced all of your Analog Trinity the only thing left to get rid of is yourself. Executives tend to frown on this option. As a result, businesses are looking for new ways to compete, and all of those revolve around human differentiation and uniqueness.

Social Media isn’t just a kid’s game. It’s not about commenting on funny pictures. Social Media is a window into our thoughts, feelings, desires and fears. People don’t pour out their souls on social media figuratively, they do so literally. The data being generated by this interaction is immense, and Big Data analytics is the result of sixty years of effort to digest and understand unstructured data, such as emails, videos and text, as well as we understand structured data, like what we manage in databases and spreadsheets. Through Big Data, our analytic techniques have finally advanced to the point that understanding peoples’ thinking patterns is now possible. Couple this with the immense volume of information now at our disposal, and developing a deep understanding of each and every individual on the planet is increasingly becoming a reality.

In today’s world, it is now possible to KNOW if a given employee is an asset or a liability. Which means, doing so is now the difference between success and failure. We can now see who actually gives good customer service, versus who simply gets customers off of the phone faster. We can quantitatively assess who is productive, and who is merely a good follower of rules and metrics, resource- or capital-style. As organizations start to explore this new frontier of analytics they are coming to a new conclusion: people who successfully mimicked raw material or capital aren’t terribly effective at adding value in a differentiated, human sort of way. In retrospect, this should not be a surprise.

Artificial Intelligence and the Renaissance of our Humanity

The other hot topic in business these days is Artificial Intelligence (AI), or Machine Learning (ML). Here, technologists hope to replicate and eventually replace the very elements of our humanness that we tried to engineer out of our operations for two centuries. Namely, creativity, variability and understanding. It is ironic that we turn to technology to provide the very thing that is readily available in our existing pools of labor, it’s just hard for us to measure.

AI is enticing because it looks like a way to short-circuit our inability to properly understand and measure human cognition. I would argue that this is a dangerous mindset. AI doesn’t eliminate the need to better understand and measure people, it does the exact opposite. Technology is just a lever. It enhances human abilities. If we use AI or ML to advance our businesses, we better leverage the best thinking from the best people. If we leverage stupid people, we’ll get stupider.

Leveraging Artificial Intelligence and Machine Learning will demand that we understand our humanness better than the current state of the art. This is not a technical challenge, it is a political and social challenge. Before AI can have a significant impact on our productivity we must first change our organizations so that they measure, understand, value and reward human contributions to productivity, as distinct from capital, resources and the Analog Trinity.

All of this points to the need to manage people and their value in an entirely different way. Rather than Human Resources or Human Capital, we must start to manage Humans as Assets. If we do not, they will surely be a liability in a world of automated, click-to-accept, predictively shipped gratification, run with mathematical precision and little, if any, humanity.

The Answer Lies Within

Organizations that do so stand to benefit greatly, independent of their use of AI, simply because human creativity is the only variable left in the equation of productivity. Organizations that embrace the notion of humans as assets, rather than resources or capital, will become more responsive, more creative, more innovative and ultimately more successful. If they do this along with embracing AI or ML, they will become unstoppable.

This will necessarily be difficult, because it flies in the face of two centuries of dogma surrounding how we value people and their inputs. Organizations many not want to face this reality because doing so will be hard. Most things worth doing are hard. The rewards will be there for those who invest in this change. Those who do not will hopefully find comfort in knowing that as long as they devalue those traits that make us human, they themselves will have little value, too.

As an engineer, science fiction movies are usually a hit with me. Nothing entertains me like a space opera with lasers, robots and Homeric heroes. But when I’m asked which movie is my favorite some that make my short list might be a surprise. The Shawshank Redemption is one such movie. Set in the mid 1900’s and based on a novella written by Stephen King, this movie is about a man who, by a tragic turn of events, found himself serving two life terms in prison for murders he didn’t commit.

Rather than letting this hopeless situation crush his spirit, he sets himself on a forty-year-long mission to get out. It’s a story that shows how your situation is not your fate. Rather how you choose to deal with your situation determines your fate. If you are honest with yourself about your situation, and deal with it with hope instead of despair, you might generate surprising results in the end.

A Prison of Habit?

I recently had a discussion with two executives from a large financial firm. We covered a range of topics, both internal and external to their company, from negative interest rates to ISIL, and from re-engagement with Cuba to their troubles with connecting with Generation Z. As hither-and-yon as these topics may be, they are interrelated, or at least that’s what all of my research over the last decade tells me. These disruptions to the world most of us grew accustomed to are appearing in all aspects of our lives. To me, this synchronicity is no accident.

Over the last three years I’ve given over three hundred presentations on Big Data, Analytics and Organizational Change so I’ve seen a lot of reactions from a lot of audiences. The reactions almost always follow the Seven Stages of Dealing with Loss. According to psychologists these seven stages are:

Shock
Denial
Anger
Bargaining
Depression
Testing
Acceptance

Shock

From my hundreds of presentations on Big Data, disruption, and so on, shock is the most typical response I have seen. Those who are shocked usually just leave the room, mouths open, eyes wide as saucers, a slight stagger to their gait. I have noticed that it is not unusual for me to finish my presentation, ask if there are any questions and no one will volunteer one, at least not at first.

However, when I stick around after a presentation, people will invariably approach me about half an hour later fairly bursting with questions. That’s a good indication of shock: it takes people a while to process what they just heard, digest it a bit, and only then can they respond with a million questions on what they just heard. I’m generally sure that they’ll survive their initial shock when they’re asking questions faster than I can answer them.

Shock comes in Big Data once people realize how pervasive these tools and techniques already are, how far behind most organizations really are, and how difficult it will be to catch up to those with a head start. If you are here, there is much work for you to do.

Denial

The bulk of executives I meet with go with Denial: Maybe all of that change is going on, but we’re immune to it because INSERT SOME RATIONALE OR OTHER HERE. They’re convinced that because of some specialness in what they do, change won’t happen to them. And over the years, I’ve heard them all: We’re too big, we’ve been doing this too long, we’re too regulated, we’re too smart, we’re too simple, we’re too complex, we’re too capital-intensive, our customers love us too much, and so on and so on. Denial is easy because it costs nothing, at least for a while. And, it is remarkably self-assuring to tell yourself that through your hard work you’re too-something for the outside world to affect you. Your competitors love it when you buy into the notion that you’re some kind of special snowflake, because you’re making it easy for them to annihilate you while you sit in your comfortable bubble.

Denial is common because it is easy, it doesn’t require much thought or effort, and it’s really cheap, at least for a while.

Anger

A small percent in the audience responds with anger. However, those who are angered by what I present rarely approach me to discuss their anger directly. Instead they let it fly on their surveys after the event. After all, it’s easy to get in someone’s face when you’re not actually in their face. Anyone can be courageous through anonymity. When this happens they’re usually attacking me on style, rather than content. I was too brash, I wasn’t PC enough, the color of my Starbuck’s cup was offensive, whatever. I generally feel that everyone is entitled to their own opinion. Variety makes us stronger. So, when I get this sort of response I usually write it off as another example of people who believe in being ‘open minded,’ as long as you do it their way.

Anger in Big Data comes from the notion that everything people have worked so hard to achieve for so long is somehow wrong. That somehow, everyone that has worked at business or technology for the last fifty years is somehow incompetent or ignorant, and that the changes we now face should have been knowable decades ago. Anger with this viewpoint is fair, because this assessment is anything but fair. People weren’t incompetent for the last 60 years. Rather, they were so successful that their entire game has now changed.

Bargaining

Bargaining is the next phase of grief management, where the mind tries to make a deal with the universe, attempting to get a better outcome through karmic barter. This almost always manifests as someone saying, “I retire in X years, I just want things to stay the same until then so I don’t have to deal with it.” I hear that one A LOT! Bargaining maintains your subconscious’ need for the illusion of control, rather than accepting that in this instance you have none. Loss of control is very disquieting, so trying to trade a smaller loss for the one that you’re facing is an obvious psychic ploy.

Bargaining is the typical strategy for technical people. They frequently skip past all of the emotional mumbo-jumbo, and want to get right to solving the problem. Or at least, what they believe to be the problem. You see bargaining when technical people start to offer less-offensive solutions to the problem at hand. Sometimes these might actually work. But, more often, they are palliative detours designed to make people feel like they can choose the degree of change required by the situation at hand.

In Big Data, you see bargaining every time a CIO or CTO claims that a new platform is the solution to everything. You see it every time a CMO or COO gets a technology budget of their own. You see it every time a CEO introduces their company to their new “Chief Data Officer,” who has no budget, staff or mandate other than to make this ‘data stuff’ go away.

Depression

A relatively few go with Depression; we are doomed and there’s nothing we can do about it. I try to console them with, “There’s plenty that you can do, it just might not be what you WANT to do.” Generally, when someone is at this point they’ve already found clear indications that their world has changed, and the results of that change are becoming clear. Customers may be leaving in increasing numbers, revenues are down, profitability is tanking, your best employees are leaving, and so on. Or worse, some upstart has already shown up in your market and is eating your lunch, Uber-style.

Depression sets in once you realize that not only have things around you changed, but you yourself must also change if you’re going to survive. Passively accepting change is hard enough. Full-blow depression sets in when you realize that you must respond to outside change by actively changing yourself. Your task just got at least twice as hard, and it’s a bummer, isn’t it?

In Big Data, depression comes when you realize that your hyper-expensive, 23 wonkabyte, 10,000 node Hadoop cluster didn’t magically solve every problem your business has ever had. It comes when you realize that the “data scientist” you hired off LinkedIn didn’t have a PhD in statistics, they had a PhD in the Appreciation of Statistics, and a minor in creative writing. It comes when you realize that your new Blockchain marketplace is just as hackable as every other “hack-proof” technology that has ever come before, in the six millennia that people have been trying to make information “Hack-Proof.” And depression comes when you realize that everything that your own compliance department said that you couldn’t possibly do was just done by six college drop-outs living on a boat anchored 12.01 nautical miles off the coast of the United States.

As we enter what Gartner Group calls the “trough of disillusionment” with Big Data, expect to see a lot more depressed people wondering about wondering what to do next.

Testing

Testing is where we begin to explore the possibility that what has happened is not going to undo itself, and what might that reality entail. We attempt to see what our new world might look like, and try to see ourselves in it. Our minds do this all the time. When we chose our preferred narrative, our preferred response and our desired outcome we call it daydreaming. Day dreaming is fun, because we are in control. Testing is not as much fun, because we don’t control the narrative, our response is what we hope is the best compromise, and the outcome is very much in doubt. Nonetheless, reaching the point of testing is a good sign because you’re returning to your present self, and you’re preparing to deal with change rationally and productively.

In the arena of Big Data disruption, Testing starts to show itself when business leaders start to brainstorm how they could change, what those changes would entail, and what benefits might accrue. If these thoughts are joined with a healthy dose of “and here’s the pain of not changing,” then there’s a much greater chance of success in whatever steps you choose.

Acceptance

Acceptance feels like a release, because it is. It is a release of all of the doubt, hurt, fear and other negative energies that cause us to freeze in the first place. There’s a freedom in finally acknowledging change. There’s a clarity that comes from finally accepting that you must change, and that you have no alternative. Making a choice, even if it is one you don’t want to make, frees up enormous psychological energy. Rather than focusing on methods of prevention or escape, you focus on how to succeed with your new reality.

When I wrote this I thought to myself, “Is this true? What about the Shawshank Redemption” Andy Dufresne seemed to never succumb to his reality in prison. Andy never accepted that he was a convict, and struggled to regain his freedom. Superficially, he never gave up hope that he would get out. But, look closer and you will find that Steven King had a deeper thesis than this. In the story, Andy does indeed go through the seven phases of dealing with loss (of his freedom).

At the end of the movie, when he is finally looking for the strength to follow his escape plan he only gets there through acceptance. His last statement to his friend Red is, “Get busy living or get busy dying.” This scared Red to no end, as he interpreted this to mean Andy would kill himself. But, this was not the case. Andy wasn’t ending his life, he was ending his denial and indecision over his situation. He came to accept that if he didn’t make a risky choice, then he was doomed by the world around him. What appeared in the movie to be defeat and resignation was actually acceptance. And this acceptance finally gave Andy the courage to take control of his situation, and reclaim his life.

This movie, The Shawshank Redemption, was not a story about how people suffer from injustice, it was a story about Andy chose to fix injustice by acceptance and action.

Holistic Medicine for Your Data

Wherever you are in your process of dealing with Big Data-Induced Grief, we are here to help. We know what you’re going through because we’ve gone through it, too, and we took good notes along the way. Surdak & Company won’t keep you from getting scars. After all, you are crossing a chasm filled with digital thorns and sharing-economy dragons. But, most of us have already earned our first aid merit badges, and we are well-stocked with Bactine.

If you’re like me, there are certain events in your life that you look back on and realize that they completely changed your perspective. Your first week at college. Your first job. The day you first became a parent, and so on. In the few months since Chris Surdak wrote Jerk – Twelve Steps to Rule the World I’ve listened as he has shared his concepts from the book with thousands of people. At the conclusion of almost every presentation, I found the majority of audiences staring back in stunned silence as they absorbed his perspectives.

One backbone of Jerk is a notion that information is now more valuable than capital. Initially, this concept felt like a strange leap of faith that I had a hard time truly embracing; like ‘The pen is mightier than the sword’. I kind of get that one too, but I never really bought it. In my life I’ve watched many more people hurt by sword induced events than those induced by pens so I guess I’ve been more of a ‘sword guy’.

So, when I started reading Chris’ first book, Data Crush, it took me a while to really buy into the “information is value” thing. But as I read statements such as “Capital is now like oxygen. Its availability is assumed and not appreciated or noticed – until you don’t have any”, it made me tilt my head slightly, like a dog hearing a high-pitched whistle, and wonder how this new concept really makes sense. I thought that I must be missing something. It sounded good, and seemed to have some reasonable basis like ‘The pen is mightier than the sword’, but it just didn’t push it in my soul like most concepts the way it must in order to really ‘get it’.

When I Finally Got It

The moment when it all came together and I ‘got it’ remains crystal clear in my mind. I can remember what I was wearing, where I was, and the time of day. I was in the backyard of a friend’s house, overlooking the Los Angeles basin. I was watching the traffic on the 405 thinking about how happy I was to not be in it. I was enjoying a glass of wine and talking to Chris about Jerk. It was March 25, 2016 at 5:15PM Pacific Time.

Yes, I remember it with that level of detail. As I walked around listening to these new ideas I randomly focused on a nearby building. Suddenly, it all gelled. It suddenly made sense. In that moment, I swallowed the ‘red pill’ and my world view changed forever. I’m surprised I didn’t drop the glass in my hand like you see in movies. That building was a Courtyard by Marriott, one of many hotels in that area frequented by business travelers. It has been there for many years and while I noted its presence there many times I never really noticed it.

But this time was different.

As I looked the building up and down, I thought, “Marriott spent millions on that building. They invested in point-of-sale systems, back-end integration with dozens of business information systems, an enormous HVAC system was installed and maintained as well as WiFi, cable TV, utilities, and all of the other amenities expected by guests. Huge sums of capital were invested in branding, loyalty programs, and on and on. Marriott spent years of effort and millions of dollars to create that capital asset and to maximize their returns on their investment. They put enormous capital wealth into this building with the expectation of creating still more capital wealth. After all, that’s how investing works, isn’t it? Ten years ago if you‘d asked me if I’d wanted to own a hotel, I’d scream ‘of course!’ It would mean that suddenly I’d have incredible wealth.

But in that moment, I literally and figuratively stepped back and realized: That hotel, and all it took to create it, are just a pin on my Hotels.com app. Nothing more.

Just a Pin on an App

More and more, when travelers go on a trip and decide where to stay, they jump on some aggregator mobile app such as Hotels.com, Trivago or Expedia. While they may have memberships in one or more loyalty programs, they are likely to shop around for the best possible deal, with loyalty points being only one input to their decision. In minimal time, and with minimal effort, the aggregator provides a customized map of properties correlated to ‘our needs’ at ‘this time’ within ‘this budget’ and ‘in this area’ with ‘these amenities’. And after a quick review of user feedback and comments to confirm our choice, we press a button and send money to a lucky winner.

So, what really happened here?

Information was proven to be more valuable than capital. As long as there was at least one hotel that met my need, my decision was based on something more than just availability. This conclusion does not mean that capital has no value. To the contrary: I still need land and I still need capital. They each have value and are required to successfully build and run a hotel. But, here the availability of both land and capital was assumed, and neither important to my decision.

The real value was the information about the hotel aggregated within an app. The app controlled my choice at that moment through the use of contextual information. The app inverted the laws of supply and demand, ignoring mass appeal to addressed my specific needs at that exact point in time. The app gave me the hotel I wanted, when I wanted, at the price I wanted, where I wanted it and with all the amenities I needed.

Despite branding, marketing, advertising and promotion, in that moment all of the hotels that met my requirements were commoditized. They were either ‘in’ my search criteria or they were ‘out.’ Beyond that, they won my business either on price, customer ratings owned by the aggregator, or both.

Capital-Centric No Longer Makes Sense

When you view value created in this entire exchange using traditional capital-centric perspectives and metrics, it doesn’t make sense. How does the entity that invested all of the capital, raw material and labor in such a tangible asset become the commodity in the equation? Marriott should be rewarded for making the whole thing work so well. They did all the hard work. Right?
But that’s the point of this whole transition. Capital (in this case, a hotel) is like oxygen. Only the absence of a hotel – with the location, amenity list and price I want – makes me concerned. Assuming that this is available, I now expect to just pick one that works for me. And at the end of the day, I don’t really care about which one gets my money. I just want a convenient and cost effective place to stay that meets my needs. The tools that provide this experience are easily available and produce better results. They also capture most of the value in the transaction, turning traditional capitalism on its head.

So to the actual hotel owners and operators, I applaud your commitment to building and maintaining these costly assets. I really appreciate it. I also know it’s tough to accept that my selection was based upon the efforts of a company that owns none of it, and invested little or no ‘Capital in the entire process.

In the end, that translates into ‘Congratulations on becoming another $20 million pin on my free app’.

In my new book, Jerk: Twelve Steps to Rule the World, I discuss how companies such as Uber, Airbnb and Simple Bank are using new business models to disrupt existing industries. These new innovators cause disruption, or “jerk”, by breaking with the traditional rules of capitalism and embracing Information as the new source of wealth and power in our world. Combining information with new consumption models such as sharing and bartering economies, Jerks create enormous value for end users by better utilizing present investments and creating increasing information wealth along the way.

Recently, my team and I spent several days with a delegation from the Department of Economic Development of the Government of Dubai. This group, led by H.E. Mohammed Shael Al Saadi, and Mr. Wael Osman, is tasked with driving Dubai to the forefront of the global information economy. Their mission was to visit with experts on Big Data, Security, Blockchain, Smart Cities and the Sharing Economy in several cities across the United States and explore the latest innovations in these areas. Through a comprehensive group of initiatives, Dubai is seeking to jerk or disrupt the way that information is created, stored and utilized around the globe, and to do so in a way that simultaneously emphasizes speed, openness, security and value.

Dubai’s goal is not to become merely a smart city, but rather to become the smartest city, and a model for all other cities around the world. This is an enormous undertaking that would take any organization decades to implement. For a government to undertake this effort, with the goal of completing this transformation ahead of Dubai’s 2020 World Expo is truly monumental. But, as stated by Al Saadi, “We have a God-given ability to fix the challenges that present themselves. The key is to choose to change and then to do it. Only then can you find and fix the issues that arise.”

An Open Road to Success

The effort, driven by the Smart Dubai Office, began in March 2014 when His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, launched the Smart Dubai Initiative within The Executive Office. A small initiative within a government office was then turned into the Smart Dubai Office, lead by Her Excellency Dr. Aisha Bin Bishr as Director General, with the governance structure and authority to unite public and private sector leaders to deliver an efficient, seamless, safe and impactful city experience for residents and visitors.

To achieve its strategic pillars, Smart Dubai has introduced strategic initiatives and developed partnerships to contribute to six key dimensions: Smart Economy, Smart Living, Smart Governance, Smart Environment, Smart People and Smart Mobility.

This effort is firmly rooted in the very latest in technology advancement. However, Smart Dubai is taking its city transformation mandate beyond technology and into measures of actual happiness. As discussed in Jerk, as part of the Six New Normals, the Smart Dubai leadership team is guided by the conviction that “technology is only a means to an end; our end goal is people’s happiness.” To fuel this city transformation to happiness, the Smart Dubai Office recently launched its Happiness Agenda, adopting a globally unique, science-based and methodical approach to impacting happiness for the whole city. Under the Happiness Agenda, Smart Dubai is introducing a framework to ensure that individuals’ happiness, satisfaction or well-being is factored into leadership’s decision making on important city projects.

One initiative within the Happiness Agenda is the so-called ‘Happiness Meter,’ a customer satisfaction metric that was launched by Smart Dubai in October 2014, and is now in use by upwards of 40 government departments at service centers, websites and other ‘interaction touchpoints.’ Results from the meters feed into the ‘Happiness Index,’ a real-time happiness score for the city. City leadership and heads of government departments are able to call up the ‘Happiness Index’ for the city, or their department, through a mobile app.

This May, the Happiness Meter was opened to the private sector as part of the city’s Open Data initiative. Emirates NBD, one of the largest banks in the city, has already adopted the system for its mobile banking services. Upgrades to the Happiness Meter functionality and analytical capabilities are currently underway, with new features scheduled to launch later this year. This is a prime example of how government Open Data initiatives can have a direct bearing on private enterprise, leading to entirely new solutions for residents and consumers.

‘Do, Then Learn’

As discussed in Jerk, “Do Then Learn” is one of the principles followed by successful innovators. Dubai is actively embracing this approach, as demonstrated by their enactment of their new Dubai Data Law, late in 2015. This law required all government departments to open all of their data to each other and to the public. With the force of this decision by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Dubai has implemented its Open Data plan with a speed and certainty of purpose that is often elusive for government entities. As shared by Al Saadi, “We were certain of the need for smart, decisive action. Anything less would be unacceptable to us.” “We knew there would be challenges, but we could not know and address them until we actually began to implement.”

The Dubai Data Law called for the establishment of a governing body to oversee the implementation of the law. In accordance with the law, the Dubai Data Establishment was announced in early 2016, under the Smart Dubai Office. Data is the fuel of the city’s smart transformation, and the two organizations are closely aligned. Assistant Director General of the Smart Dubai Office, Younus Al Nasser, is also the CEO of the Dubai Data Establishment.

This is not the city’s first digital transformation. In 1999, His Highness Sheikh Mohammed launched Dubai e-Government, a new department charged with digitizing all government operations. Setting the stage for Dubai’s current ambitions, Dubai e-Government was tasked by His Highness to “make Dubai a digital government in 18 months” – a remarkably short time table that was met.

The Dubai e-Government department continues to operate today, although it has evolved into the Smart Dubai Government Establishment. “SDG” operates within the Smart Dubai Office, under the leadership the CEO, Wesam Lootah. SDG is the ‘technology arm’ of Smart Dubai, bringing more than a decade’s experience developing, implementing and enabling smart services for government departments. SDG recently published a report quantifying its impact on the government – over 1 billion USD saved over the past 13 years through the use of shared smart services and infrastructure.

SDG are the creators of DubaiNow, a mobile app which aggregates all government services into a single customer interface. Over twenty government departments are already participating in DubaiNow, in addition to several private sector companies, such as telco’s and health providers, and NGOs.

Smart Dubai Government is also the custodian of the Smart Dubai Platform, the ‘digital backbone’ of the city. Unlike most other smart city platforms on the market today, Dubai’s platform was co-created by Dubai leadership and a local ICT provider to fit the exacting requirements of the Dubai’s smart city mandate. The Smart Dubai Platform will ‘orchestrate’ Dubai’s data, and will become the public face of Open Data for the city. Current timelines suggest that the first open data sets will be available to access through the platform in early 2017.

By opening the city’s data for all to use, Dubai creates a tremendous engine of innovation. Before Open Data, it would be difficult for anyone to analyze how the city operated, where there were issues and how they could be improved. With Open Data anyone can look at the city’s vital signs, its rhythms and moods and look for new ways to improve all aspects of life in Dubai. Open Data allows anyone to participate in this process, creating an environment of competition and innovation unlike any before.

As radical as this change may have been to Dubai’s departments, it is just the beginning. Dubai’s leadership, including Abdulla Al Madani, chairman of the Dubai Open Data Committee, recognize that it is not enough to make the city’s data open. This data must be shared by both public and private organizations in order to produce valuable outcomes for the people of the city. Shared data is the real goal, allowing everyone to participate in the information economy. Creating an infrastructure, architecture and standards for such sharing are the key next steps to realizing this vision.

Securing a Public Resource

Shared Data is a great step towards Dubai’s digital future. But even this is not enough. Shared data can be both a vulnerability and an asset, hence securing this data is imperative. Users must be certain of the validity and accuracy of the data that they intend to use. Hence, a state of the art security architecture is being implemented to protect this public asset.

As challenging as this may be, it is far easier to secure open, shared data than to secure how we operate today. As explained by Al Saadi, “With the old way of managing data, anyone in the government could be an inadvertent security leak. A photocopy of a license, application or photo could be left on a desk or thrown away, and a moment later be in the hands of someone wanting to use that information to do harm. With Open Data, attempts at falsifying or stealing data are known to all, and errors or breaches can be prevented from occurring. With Open Data securing people’s information is much easier, rather than harder.”

Open, Yet Private

This leads to the natural question of privacy. Will Open Data still protect the privacy of individuals? In today’s world of smartphones, apps and social media, the concept of privacy that has existed for the last half-century is largely gone. Being an invisible resident in a city of millions may have been a reality for many decades, but the Internet and the mobile revolution has brought such anonymity to an end. In this digital era we are returning to a time before the telephone or the computer or the car, where everyone knew each other and were neighbors. People still had their privacy, but much of their lives were spent as part of the community.

With Open and Shared Data we are reviving this sense of oneness and community, only now with millions or even billions of friends, family and neighbors. In this new world, the parts of our lives we wish to keep private will still be protected and respected, while the parts that we share will be used to benefit the whole community. The critical factor is choice, and the leadership of Dubai is ensuring that its people can choose what they wish to keep private, and what they choose to share. This will include anonymizing data, selective participation or opting out where this choice is deemed most appropriate.

Much of this privacy framework will build upon Dubai’s privacy law enacted in 2007, and another update to this law is expected late in 2016.

Welcoming the World

As deployed, this combined solution will enable innovative business models such as resource sharing, capital, labor and expertise bartering, and talent arbitrage, all enabled through the effective use of data. As these capabilities are launched in Dubai it is hoped that the combined solution is so advanced and its utility so compelling that people worldwide will choose Dubai as the hub of all of their online activities. As Dubai has set itself as a global trade and travel hub, it will soon also be the center of the world of online commerce and living.

Backwards Compatibility

Dubai’s vision is so advanced that it leads to a problem of a different sort; how can others keep up? Indeed the online community and marketplace envisioned by Dubai is so far in advance of what is currently available that many people around the world may find it difficult to bridge the gap. Again, Al Saadi and his team have anticipated this challenge, “We must anticipate the difficulties people from other cities may have in catching up to where we are heading. We must provide a sort of backwards compatibility, as you see with computer operating systems, so that people who want to join us are able to make the leap ahead without too much difficulty.”

This goes beyond defining technical gateways such as APIs or standards. It may include defining regulatory and legal frameworks that allow for the free flow of open data from and between societies that have not yet caught up to Dubai. Providing for these bridges now ensures that all cities may benefit from what Dubai learns as it moves forward with its vision, ensuring that it stays at the forefront of this new economy.

The Will to Change

Without doubt, the vision created by His Highness Sheikh Mohammed Bin Rashid Al Maktoum is a great leap forward. many others talk of bold steps, but Dubai has the will to act. There is no illusion that this journey will be easy or that there will not be challenges along the way. But, as I have discussed in my writing elsewhere if you are not challenged by the unexpected or unanticipated you are likely not really innovating at all. To reach a bold new future you must first decide to make the trip and then face each unexpected challenge with the best problem solving you can muster. This is the path towards new worlds, and by all appearances the people of Dubai may be there waiting for the rest of us once we arrive.

For some, the process by which big data enhances marketing is obvious. For others, it takes some education. Regardless of your title, experience, or industry, you must understand one fundamental principle: marketing is not about selling. Neither is advertising about selling. At their cores, both activities are about forming, maintaining, and optimizing a connection with your customer. The way to best meet this goal is the same in business as it is in social interaction: understanding.

The Key to Understanding

Connections are stronger and last longer with deep understanding. They are emotional. The more you know about a person and their motivation, the better you can relate to them, empathize, sympathize, and share in their experiences. To buy something -even the decision to buy- is an emotional experience. These emotion-driven actions are not only applicable to friendships or familial relationship. They form the strongest foundations for relationships between a company and its customers. If you get this right, you can achieve long-term customer engagement. Get this wrong, and you may never earn another shot.

Effective understanding for marketing purposes relies on the following six key elements:

WHO are they? Answer with detailed demographic information. The more details, the better the answer.

WHAT are they seeking? Answer with the solution they seek. For example, “a clean house” is a goal, while “a vacuum cleaner” is the solution to reach that goal. A vacuum cleaner under $400 with HEPA filters is a more detailed description of the solution they seek.

WHEN are they seeking? Answer with details about their timeline and yours. How long is their buying cycle? How long is your sales cycle? Where do they first intersect?

WHERE are they seeking? Answer with details about their geographic preferences: brick and mortar, online, both? How do they define their geo?

HOW are they seeking? Answer with details about their buying cycle. For example, what is their Zero Moment of Truth (ZMOT)? How many resources (referrals, ads, blogs, etc.) are at their disposal? What value do they place on each resource?

If generating the right answers to those questions doesn’t keep you busy for at least a couple hours, your answers are wrong, you don’t know enough about your customers, or you just don’t care. Or some combination of the three. Perhaps you believe you already know their answers. In the era of Big Data, believing that you know these things without having facts may be increasingly fatal to your business.

But I said six key elements. Have you already figured out what is missing?

The Importance of Why

“Why?” is the most important and complex question for successful marketing. It closes the loop of understanding, opens new opportunities, and forces new ideas. Also, context has trumped content as the dominant means of understanding your customers’ “why.” For example, if you owned a printing company and Donald Trump bought stickers that said “Trump Pence” on Monday July 11, it would have seemed strange. Strange, until the “why” question was answered. At that moment you became one of the few people on the planet with early knowledge of his choice for Vice Presidential running mate…and you would likely have been sworn to secrecy.

“Why” mattered a great deal.

But that example barely scratches the surface of why “why” matters. The question has multiple facets. Let’s go deeper to explore more whys.

Why did he pick your printing company? Quality, price, location, great Facebook reviews? Knowing that answer serves as an input for future marketing decisions.
Why did he order them on July 11? Understanding his (and other customers’) buying cycle serves as an input for future marketing decisions.
Why did he search for a printing company instead of using an existing relationship? If you offered something his current shop did not, you have a competitive advantage that needs to be promoted.

The answer to “why” can help bring understanding or even better answers to “who”, “what”, “when”, etc. The unstructured data (“why”) that you may or may not have had previously, offers clarity and insight to the structured data you have been studying (hopefully) for so long. Unstructured data is your most valuable untapped resource.

What About Big Data and Marketing?

Success with Big Data is not about technology. It’s not about creating the perfect data warehouse from the latest technology from the coolest vendor. Instead, it is about doing things that you haven’t done before. In particular, it is about analyzing unstructured data, which until recently was not readily available or analyzable.

The combined analysis of structured and unstructured data makes the difference. Analog companies of the last few decades were focused on structured data: quantifiable information such as demographics and sales volume. A few companies trying to be hip and edgy started looking at their unstructured data but failed to incorporate their previous structured data analysis or ignored it altogether. They must work with cohesively toward the same goal.

Big Data enhances marketing because it enables better understanding of your audience. Having huge amounts of information at your fingertips is useless if it is not put to use. Customer service ratings on Google, logistics analyses, retail in-store behavior studies, even employee reviews all offer real-world examples of “why”. They serve as a means of gathering data that can be measured, analyzed, and used as input for future marketing decisions.

The Courage to Follow Big Data

For Big Data to enhance marketing, it should challenge many of your current beliefs. It will almost necessarily be scary. This data must be reviewed and then reflected against your goals. Where do you want to be tomorrow? Next year? Next decade? Big Data can help you reach those milestones or give you incontrovertible evidence that one or more of your goals is not achievable. You must have the courage to follow the data. Informed decisions are better than blindfolded throws at the dart board.

Think of your structured and unstructured data more as inputs than support. If all you seek is justification for your existing decision, you won’t be in business much longer. You are competing against leaders much more hungry for success than glory. Their goal is to reach the market, not force the market to reach them. With an effective analysis of your data you are empowering yourself and your team to meet an unmet need.

It’s the latest rage. If you haven’t at least heard of the newest phenomenon sweeping the Internet, Pokémon Go, you probably aren’t going to be reading this blog either. Developed by Niantic and published by none other than The Pokémon Company, Pokémon Go is a singular sensation that is breaking all sorts of records, like rate of adoption, that are a marketers dream. The strength of the app’s launch drove the stock of Nintendo, who holds the licensing to the Pokémon universe, up twenty-five percent. It is nothing short of a sensation.

The Success of Pokémon Go

The allure of Pokémon Go goes beyond the continuation of one of the most successful brands ever. It is the first augmented reality game that has seen such high level of play. Unlike previous games in the franchise, players in Pokémon Go are playing in the real world, augmented by the app. Players must travel, largely on foot, to achieve their goals. The running joke on the meme stream is that the game has done more for childhood obesity in one week than the First Lady did in 8 years in office. There is truth to this statement. My own teenagers have walked more in the past two weeks than the last two years, or so it seems. Even my younger one, with a freshly minted driver license, takes the new-found freedom of a car and meets with friends to walk and find Pokémon.

One of the tenants of being a Jerk, in the parlance of Surdak & Co., is to do first and figure out the consequences as you go. However, this paradigm does not mean thought shouldn’t be given to certain aspects ahead of time. To not think things through can also just make you a jerk. Pokémon Go gives us great examples of both types of jerks.

Pokémon Go Negative Reviews

There have been widely publicized complaints, anecdotal and real, of trespassing incidents, car accidents, people falling off cliffs, and hordes of zombie-like teens roaming the streets with their faces glued to their phones (the last item being not too unfamiliar regardless of the game). There is a din of complaint, largely from the “adults”, that the kids need to pay more attention and that the game is a hazard. Even the obvious health benefits are eschewed by some under the “in my day we didn’t need AR to go for a walk”. All these complaints and criticisms are what is to be expected when something is Jerked. While I have no proof, I’d find it hard to believe that the makers of the game did not have a conversation about such things and said to themselves “we’ll work that out” and kept moving forward. The allure and success of Pokémon Go, including these distractions, bears all the hallmarks of something that radically and unalterably shifts the domain of which it is a part. They’re Jerking their world.

Pokémon Go is a Jerk

Not every issue that has arisen with Pokémon Go falls into this category. When the Pokémon Go app was first launched, iOS users were presented two log-in choices, one of which was using your Google credentials. When the Google credentials were used, the app was granted full access to the user’s Google account. While the full technical implications of this access are still being debated, it certainly gave the appearance that the app had complete access, including the ability to send emails. The outcry reached the US Senate and questions about privacy were raised across the Internet, with social media amplifying the noise. Parents were upset and the level of participants dropped noticeably. The developer’s cries of “honest mistake” were challenged since they were incubated within Google and clearly should have known better. This is an example of not thinking something thoroughly through enough. It is clearly not an aspect where Jerk principles should be applied, it’s more of they’re just jerks for not thinking it through. Laziness does not equal Jerkness. The developer has released an application update to fix the issue, but the damage was done.
The principles of Jerk do not mean you need to think things out. Au contraire, they mean you need to think things through more thoroughly. To truly be revolutionary, you need to know what can and cannot be re-accelerated. Being a Jerk is about vision, thoughtful planning, and disruption. It’s not about just seeing where things fall. That’s just being a jerk.

Rich Buchanan is an engineer and technologist who is also one of the adults over thirty who has played Pokémon Go since its release. He is currently hunting for a Jolteon.

My son, Chris Surdak, has been a challenge. He was an entrepreneur as early as junior high school. In 7th grade, he saw that a demand for chewing gum was not being satisfied during school hours. He noticed back then that school lunches cost $0.60, which meant that every kid in school started their day with at least one dime. He also noticed that gum cost $0.05 per piece, and that represented an opportunity for a 100 percent markup.

He started small, bringing to school about 100 pieces of gum per morning. Within two weeks, I was driving him to our local K-Mart, where he bought their entire stock of bubble gum at nearly wholesale. Within a month, he had franchised his business, and had five other kids selling gum for him. He was wildly successful – until the school principal shut down the operation. It’s evident that he fully understood the value of context even then.

Thirst for Knowledge

Chris has always had a thirst for knowledge in every field. You can see proof of that in his two books, but especially in Jerk. Jerk: 12 Steps to Rule the World defies categorization. Its objective is to describe how the world of business got to where it is, what the challenges will be, and what can be done to succeed. To fully explain all that, Chris provides the history of humanity in as comprehensive a manner as I have ever seen, and weaves in the philosophical and psychological factors that drive us as humans. He throws in Yogi Berra and Samuel Clemens quotes to show off, and a little sci-fi in the last chapter that the reader will find fascinating. So this is a business, technology, history, philosophy, psychology, comedy, sci-fi, futurist book. It is engaging, enlightening and a very easy read. It’s also frightening and challenging, if you stop to think about the consequences.

Intentional Exclusivity

Actually, Jerk is the Strategic Plan for Surdak & Co. – a unique consulting company Chris launched to benefit only a few companies. Why only a few? Because, Surdak & Co. wants to be a consulting company that truly partners with ONE company in every industry to guarantee their success, and will not share that strategy or tactical plan with any competitor, i.e. those few companies get complete exclusivity. That’s meaningful because Chris only hires THE best in the world. And as he continues to succeed, Surdak & Co. will corral the rest of the best.
AND, the best part is that I get to participate in this (ad)venture. I spent my entire career doing Business Process Reengineering (BPR), and deploying technology as a business process enabler. The technology has changed as the power of computers has multiplied, and new tools have made what was once inconceivable, doable. The one thing that hasn’t changed is us. CHANGE was the toughest part of BPR. It still is. And Chris and his team know how to make that happen.

So after 25 years of gaining experience and being totally frustrated with the bureaucratic nightmares of major corporations, my son is becoming an overnight success, and I’m as proud as I can be to see that happen, and continue to be a part of it.

I recently traveled to Colombia with a friend and business partner, Chris Surdak. The purpose of the trip was to present the ideas contained in Chris’s latest book, “Jerk: 12 Steps to Rule the World”. In this book, Chris explains how entire industries can experience sudden disruptions, or jerks, in their normal operations. He details how the people who cause these disruptions – those he calls ‘Jerks’ – operate. He outlines 12 rules for being a Jerk, and further explains how existing companies can defend against these Jerks.

The trip was eye opening to say the least. Chris and I have known each other for a long time. We have worked together in the past for a number of companies. We actually started our careers together in the aerospace industry. We went to grad school together. We worked for a large financial services company together. And, we’ve had a lot of fun together: riding motorcycles, attending Formula 1 races, and getting familiar with good scotch and good cigars. During the past almost three decades of experience with Chris, I’ve learned to expect two things: We are going to have fun, and I am going to witness magic as Chris takes seemingly disparate ideas and concepts and crafts explanations and insights that leave me amazed.

So, with much anticipation, and not sure exactly what to expect, I found myself flying to Colombia late one Sunday night. Chris’ last email to some of our friends, started with “If no one hears from us, you can contact…“ I felt like Christopher Columbus sailing off to see if the end of the world really was a big waterfall into the abyss. It didn’t help that I was supposed to be picked up first by two people unknown to me.

When I got off the plane, it was very late. After putting my bags through an X-Ray machine, I waded into a sea of people holding little signs with names on them. I’ve never seen so many people looking for their rides. After what seemed to be a long time, but was probably only a couple of minutes, I found myself face-to-face with a stranger who was peering down at his notepad. I was so close, I could peer down also. I found myself looking down at a copy of my passport picture. “That’s me!” I exclaimed. And that is how I met our host for the week. Alejandro was joined by our interpreter, Jorge. The three of us had some time to kill before the plane arrived with Chris and Rob, so we found a bar and started drinking. Let’s see, it’s 11:30pm on a Sunday night. I’m in Bogotá, Colombia drinking with two complete strangers in an airport bar. What a way to start the trip!

However, as unlikely as it sounds, we immediately bonded. Before we even reached the bar, Jorge started asking me questions about Chris’ speaking style, to better translate him. I had never thought about the translation issue before, but Jorge explained that there are more Spanish words than English words, so he would have to speak faster than Chris in order to match the richness of the content. Alejandro was non-stop, talking on the phone, keeping our glasses filled and making me tired just watching him. The guy was non-stop energy! Pretty soon, I determined that if this was any indication of how the week was going to go, we were in very capable hands.

The next day started very early and the pace didn’t stop all week. We presented Chris’ game changing ideas to top companies all week; the response was overwhelmingly positive. Especially rewarding was the fact that all of them “got it”. They recognized that the ideas we were presenting were game changing, and that the biggest challenge in adopting them were the cultural ones.

A typical response went like this: “I came here thinking I was going to hear about Big Data. It wasn’t exactly what I was expecting, but I’m blown away by what I did hear.”

It was so rewarding to have that kind of impact. I am so looking forward to the opportunity to return to Colombia and work with these companies to effect changes that will fundamentally improve their business models.